Assessments Board Common Fees Condominium Financial Governance Reserve Fund

Percentage of Condo Unit Ownership Formula Questioned

R.T. from New Haven County writes:

Dear Mister Condo,

I live in condo units that are duplexes; 2 units per building. There are a few that are 3 units per building but 90% are 2 units per building. Units are basically identical. The main difference is that some have finished walk out basements. The original declaration, some 20 years ago, stated condo fees were based on square footage. The board wants to raise condo fees to build the Reserve Fund for major renovation of the roof in 2031. The Board is taking entire cost to replace the roofs on the 92 units and then dividing the cost by ownership percentage which as I stated earlier is based on square footage. My problem is 2 identical units, one with a walk out the other with no walk out. The walk out unit has the same square footage of the basement included, thus a higher ownership % and higher condo fee. Roof size is the same. They want to increase condo fees across the board, 5% starting next year to pay for roof replacement 20 years from today. The total cost is approximately $200,000.00. There are 40 walkout units and 22 with new walk outs units; the roofs are with 50 square feet of each other most though are identical. The cost using the current declaration on ownership will have the walkout units paying over $2,800 with the non walkout units paying a little more than $1660, In fact the walkout units are subsidizing the other units, even though the cost to replace the roofs on all the units $2,150. I want this treated as onetime assessment and each owner to pay the cost of their unit not divide the cost by who has more square footage because they have a walkout.

Mister Condo replies:

R.T., the good news is that your Board is doing an admirable job of building the Reserve Fund to handle the upcoming roof replacement. 2031 seems a long way away but it will be here before you know it and your community will have saved enough money to cover the roof repair. Hooray! The method for doing so has come into question so let’s talk about how associations raise money. When the condominium was developed a common fee schedule was designed that took into account the percentage of unit ownership. That is very common and almost all condominiums have a similar structure. There are other factors that can go into the formula (end units may pay more, units with water views may pay more, and so on) but the formula is the law of the land with regards to who pays what percentage of the common fees, which includes special assessments and Reserve Fund contributions. In other words, if Unit Owner A carries a 5% ownership and Unit Owner B carries a 10% ownership, then Unit owner B will pay twice as much in common fees. The formula isn’t usually so drastic and there is generally a smaller percentage gap between units with different square footages or desirability factors that went into determining their percentage share. You observation about walkout units subsidizing the other units is mathematically valid but it is also irrelevant as the unit owners have already agreed to pay their percentage of ownership when they purchased into the condominium. The percentage of unit ownership is the law of the land with regards to how common elements, including the Reserve Fund, are funded. I have to side with your Board on this one, R.T.. At least you can have peace of mind knowing that there will be money to pay for that roof when it needs replacing in 2031. All the best!

5 thoughts on “Percentage of Condo Unit Ownership Formula Questioned”

    1. You should refer to your condo docs to see if there is any specific language regarding insurance expense. If not, it is treated as any other expense. Generally, that involves applying the percentage of unit owner model as discussed in the original post. All the best!

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